For those of you in your twenties—especially those with no kids or spouse—it can be hard to imagine a need for life insurance. However, more and more 20-somethings are beginning to realize how important it really is to buy life insurance at an early age. It’s a great way to start saving money, and it can benefit you strongly in the long run. Here are some of the top reasons to buy life insurance in your twenties.
The price of insurance premiums is usually based on your current health and your age. If you’re young and healthy, chances are good that you will be offered a very low premium—one that is much lower than it will be if you wait until you are at an advanced age. Many people who are just barely in their forties will still need to pay about double what their twenty-something counterparts pay.
If you should develop a chronic health concern when you’re older before choosing a life insurance plan, these premiums go up even higher. This locks you into paying much more than you would have had you signed up when you were young and healthy. That’s why many young people consider a term life insurance policy. A level premium term policy will cost a little more than general life insurance, but the premium remains the same for the whole time you’re covered. If you prefer a permanent life insurance policy, this also offers a fixed premium and is likely to increase in cash value over time.
If you have any financially reliant people depending on you, life insurance is extremely important. This doesn’t necessarily mean that you have kids; it can mean that your aging parents are now relying on you to care for them. For those of you with kids, especially those who are single parents, this is extremely important.
Loans and Debt
Many people in their twenties have debt, whether that be from outstanding student loans or even a home mortgage that someone else has cosigned with you. If something should happen to you, your closest loved ones might be stuck handling and paying for all your debt after you die. However, a level premium term life insurance policy that is the same length as your mortgage, or even as your student loans, can help your loved ones not have to pay any of that.
Supporting a Cause
If you are passionate about a certain charity or cause, you can actually attach a charitable giving rider when you purchase your life insurance policy. These riders typically don’t cost you anything, they won’t increase the price of your premium, and they don’t affect the cash value of your policy. Just make sure you choose a charity that meets the IRS definition of a nonprofit organization. To be on the safe side, you should meet with an accountant who understands the tax situation surrounding this choice.
Buying a life insurance is actually a way of forcing yourself to save money. You need to set aside money to pay your premiums. If you choose a permanent universal life insurance policy, you get to decide when you pay your premium and how much you want to pay at a certain time. You also get the freedom to change the amount of the death benefit. Universal life insurance policies usually include a savings portion that is invested on your behalf. You can use any of the interest you accumulate to pay for your premiums, as well!
Of course, all of the advice we listed here will depend on your current financial situation and your family. Contacting a professional is the best way to really assess your finances and make a decision that makes the most sense for you. To learn more about saving, life insurance, and what options might work best for you, it’s time to call the professionals. Kennedy Financial & Insurance Services Inc. is here to help you as you make decisions for both your future and your loved ones’ futures. Reach out to our team today to learn even more about our financial planning services! We look forward to working with you and helping you on your path to financial stability.